Workforce, broadband, rural investments at play in governors’ plans for economic development

As governors continue to roll out their State-of-the State addresses in the month of February, we continue to see a heavy focus on recovering from the pandemic. Given most state’s fiscal condition, governors have been generally hesitant to roll out new initiatives during this time, although broadband continues to receive attention, especially with the renewed attention surrounding its importance during the pandemic. Some states, like Maryland and West Virginia, who are emerging from the pandemic on a better footing than they perhaps anticipated, are ready to forge ahead with tax cuts in an effort to attract business and new residents. Other states, like Illinois, are grappling with projected deficits while trying to maintain services. And a new bond proposal in Maine could help connect workers to jobs in high-growth industries while also spurring development in the state’s industries. This week we catch up with those governors who gave their addresses during these first weeks of February and review each of them for news or initiatives relating to their state’s innovation economy.

Alabama Gov. Kay Ivey, Feb. 2, said she wants to renew the state’s economic development incentives, saying that the tax credits help ensure the state is competitive in attracting new companies.

Colorado Gov. Jared Polis, Feb. 17, said the state will invest in its rural communities and “continue bringing broadband to every corner of our state….” He also proposed the elimination of the business personal property tax for small businesses.

Illinois Gov. J.B. Pritzker, Feb. 17, delivered his State of the State and budget address telling legislators and constituents that he “had bolder plans for our state budget than what I am going to present to you today.” Pritzker said the budget proposed for FY 2022 spends $1.8 billion less than FY 2021, reducing spending to meet projected revenues. However, he noted that higher education is fully protected in his budget proposal and said that he wants middle class Illinoisans to “pay lower income taxes, not higher,” and so his budget does not propose across-the-board tax increases.

An additional $50 million in state matching grants will be awarded this year toward making progress on the state’s goal of universal broadband access in 2024. In considering other initiatives, Pritzker said, “The to-do list is long, but it includes key priorities like finally authorizing the overdue second cannabis licensing lottery, and passing an energy bill that protects our nuclear fleet and builds up our wind and solar industries, protects the environment, puts consumers first and supports jobs.”   

Maine Gov. Janet Mills, Feb. 23, said she wants to diversify the economy and provide good-paying jobs across the state. She said there are good-paying jobs that are going unfilled and there is a need to connect the workforce with those jobs and “make an investment in new jobs at the same time.” To that end, the governor said the administration will lay out a “Back to Work” bond proposal that asks for $25 million to partner with Maine’s career and technical education centers and our community colleges to provide equipment and to train skilled workers to fill jobs in high-growth industries, including manufacturing and clean energy. She also set a goal to double Maine’s clean energy jobs in the next 10 years and launched a program to provide scholarships and paid internships for local students with local employers in Franklin and Somerset counties, which she hopes to ultimately expand statewide.

Mills also said she will be asking for $50 million for the state’s heritage industries (farming, fishing and forestry) “to increase local processing infrastructure, to improve access to markets, and to allow Maine companies to modernize and add value to products grown, caught, cultured and made here in Maine.”

Calling high speed internet “as fundamental as electricity, hear and water,” Mills proposed an additional $30 million for infrastructure and for internet that is affordable, building on $15 in funding last year. She also said more information on the Back to Work proposal will be released in the coming weeks.

Maryland Gov. Larry  Hogan, Feb. 3, proposed more than $1 billion in tax cuts for retired Marylanders, to keep them from fleeing the state and what he called the state’s “sky-high retirement taxes,” and asked the Legislature to pass emergency legislation that would provide “more than $1 billion in immediate tax relief and economic stimulus for struggling Maryland families, small businesses, and those who have lost their jobs due to the COVID-19 pandemic.”

Pennsylvania Gov. Tom Wolf, Feb. 3, updated residents on the state of the commonwealth and delivered a budget address where he said he wants to reduce taxes on working families and businesses, and double the state investment in education utilizing a fair funding formula intended to end chronic underfunding of struggling schools. His proposed budget also contains new funding for higher education, including funding a GI Bill and a new community college in Erie. It also would create a tuition assistance program. Wolf also said his budget lowers administrative costs in the Educational Improvement Tax Credit that will also provide $36 million more in scholarships. To help the state’s economic recovery, Wolf’s budget proposes “a multi-billion-dollar investment in our workforce and economic development systems, enough to fund recommendations from our Bipartisan Workforce Command Center’s report. And it includes a major investment in our infrastructure – not just our roads and bridges, but infrastructure projects ranging from broadband internet in rural communities….” He also wants to raise the minimum wage “with a clear path to getting it to 15 dollars per hour as quickly as possible,” as well as legalize recreational marijuana.

Rhode Island Gov. Gina Raimondo, Feb. 3, gave what will likely be her last address as governor as she awaits confirmation by the U.S. Senate as Commerce secretary. In a speech that was largely a recap of her past six years in office and a thank you and goodbye, Raimondo asked that before she leaves her post the state raise its minimum wage one more time, noting that it has done so four times under her administration.

Tennessee Gov. Bill Lee, Feb. 8, said the state’s workforce participation rate is better now than it was pre-pandemic. Lee said he is proposing $21 million “to invest in rural communities and distressed counties to directly support rural infrastructure, industrial site development, small business development and revitalizing small town main streets.” He is also recommending an investment of $200 million to “help us achieve our goal of every Tennessean having access to high speed broadband….” He also is proposing a new partnership with a private foundation to “create a first of its kind rural education partnership that will improve both the college-going and college success rate of students in our rural communities.” Lee also proposed an additional $10 million for the Governor’s Investment in Vocational Education also known as the GIVE Act to create 10 new GIVE sites, with a priority on distressed and at-risk communities with the greatest need of workforce revitalization.

Texas Gov. Greg Abbott, Feb. 1, said he is making expansion of broadband access an emergency item this session.

West Virginia Gov. Jim Justice, Feb. 10, asked that the state income tax be repealed, in stages. First, he proposed that high earners income taxes be cut by a third while everybody else would receive a 50 percent reduction. At the same time, he said sales taxes would have to rise 1.5 percentage points, if income taxes were eliminated. He also suggested an additional tax on cigarettes and soda, and to begin taxing professional services. He advocated for a wealth tax on the “very, very well to do,” while also enforcing $25 million in cuts.

Justice also asked for a no-growth budget for the next three years while creating “buckets” including one for $30 to $50 million to entice businesses into the state, and another as a second rainy day fund that he said could be used for the elimination of the state income tax or for any shortfalls in its elimination. He said that “growth alone will eliminate the rest of the balance of the income tax.” Justice also asked that two new cabinet positions be created, one in economic development and the other in tourism. Justice also said he has a bill that is a “fundamental change and a modernization to how we look at corporate tax and the corporate tax structure and how we move towards making West Virginia attractive for remote workers.”